Construction projects must have a design element, and numerous parties frequently contribute to the overall design of the project. Consequently, there are a number of methods in which the parties to a given construction contract can allocate responsibility for design.
The parties must therefore discuss how design responsibility will be distributed between them and obtain a clear agreement in principle on this matter. In reaching an agreement, various factors can be considered, including I) whether the contractor should have any responsibility for design; (ii) what design responsibility remains with the employer; (iii) if the contractor is to have responsibility for design, whether the contractor is accepting responsibility for the design of the entire works or only certain elements of the works; and (iv) the extent of that design responsibility, e.g. whether the contractor is responsible for the design of the entire works or only certain elements of the works.
This agreement in principle should then be reflected in the contract documentation, and any inconsistencies should be resolved accordingly. This may necessitate thorough analysis of the contract’s terms and maybe other issues. In this article, design responsibility in construction contracts, we take a look at the process involved and the options available to you.
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Duty of care
Parties with design liability may be expected to exercise varying degrees of care in relation to the design; some may be subject to an absolute requirement to ensure that the final design is fit for its intended purpose, while others may be required to exercise merely reasonable skill and care. The allocation of design responsibility differs depending on the procurement method chosen, and the parties may also expressly alter the required level of care with regard to design in the construction contract and consultant appointments.
How to minimise risk
Providing contractors with a comprehensive understanding of what they’re agreeing to is essential for minimising risk. This necessitates analysing not only the contract’s provisions, but also its schedules and documentation.
Contractors should avoid adopting obligations that are open to interpretation, such as stating that the work should be of “high standard” or that the fittings used should be of “excellent quality,” as these can lead to conflicts. It is also essential to be aware of regulations pertaining to suitability for use. Be mindful of phrases such as “appropriate skill and care” that imply to the required level of a design-and-build contractor. In addition, requirements to meet particular performance standards should be thoroughly examined. In any of these situations, the contractor may mistakenly add a fitness for purpose obligation.
In addition to ensuring correct liability transfer to subcontractors and design consultants, contractors must also carefully evaluate their insurance status. Regardless of the agreed-upon design responsibilities and requirements, both employers and contractors must guarantee they have enough insurance coverage. The existence of a gap in insurance is not in anyone’s best interest.
Design liability
There is a bias against contractors who design projects in accordance with common law. Importantly, the basic common law obligation varies based on whether you are a designer or a provider of services and materials, i.e. a design-and-build contractor.
In the absence of explicit terms, a designer is expected to use reasonable competence and care. This is owing to the designer’s implied assurance that he possesses the necessary skills to accomplish the project.
The law presumes that when a contractor provides services and materials, he will perform his duties in a competent and workmanlike way, and that the end result will be suitable for its intended purpose. In other words, the contractor’s duty exceeds the designer’s and is not limited to the requirement to apply reasonable skill and care.
Statutory application of terms
Acts of Parliament may also impose design responsibilities in addition to common law obligations. These two aspects coexist, and the existence of a statutory requirement does not preclude the adoption of a higher standard under common law.
The statutory requirements in this instance derive from the Supply of Goods and Services Act (England and Wales) of 1982. In accordance with Section 13 of the Act, when a designer engaged in the course of business provides a service, that service will be performed with reasonable skill and care. When there is an express term in the contract regarding the performance of the service with reasonable skill and care, such an express term does not negate the statutory term unless it is contradictory with the statutory term. In addition, the Act does not affect any laws that impose a higher requirement.
This means that a design and build contractor operating under a contract that implicitly or explicitly imposes upon him a responsibility that his design be fit for its purpose cannot argue that the implied phrase in the Supply of Goods and Services Act reduces his stricter design duty.
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